Today, the EUR/USD currency pair continued that volatile championship streak from yesterday afternoon’s record. It’s now returned below this important barrier 50-day Simple Moving Average (SMA) at 1.1662. Following this drop, analysts say the 1.1600 level is the next line of support. They propose that prices could fall back even more down to the 200-day SMA at 1.1590. This change has occurred in the shadow of continued shifting political developments and market-moving economic data shaking market sentiment at the moment.
Indeed, on Wednesday, EUR/USD broke above the newly important 1.1700 level, reaching a high of 1.1743. Within weeks of peaking, the pair soon collapsed. All of them did fall under the 1.1700 level and incurred losses greater than 0.30% in today’s North American trading session. This very liquid currency pair makes up approximately 30% of all currency trades. Its volatility reflects just how much broader market dynamics are being influenced by global geopolitical developments and key economic indicators.
Political Influences on EUR/USD
Undoubtedly, recent US President Donald Trump’s own statements — or lack thereof — on the issue have contributed significantly to market perceptions. In his first productive meeting with NATO Secretary General Mark Rutte, Trump made a stunning announcement. Last week, he announced his decision to delay the tariffs, which had been scheduled to go into effect February 1.
“Based upon this understanding, I will not be imposing the tariffs that were scheduled to go into effect on February 1.” – US President Donald Trump
This decision should help to reduce some trading frictions and toned down the Euro’s newfound strength against the Dollar. Trump’s boast misses the fact that the Euro is still doing quite well against the Japanese Yen. This unfortunate circumstance reveals the fierce, ongoing competition among large, established currencies.
Even the European Central Bank (ECB) has chimed in on these developments. ECB official Kocher cautioned against using trade policy as a tool for political leverage, noting the heightened risks for the global economy.
“Using trade policy threats to exert political pressure, increasing the risks for global economy.” – ECB Kocher
These types of statements indicate a very guarded approach from European policymakers, which would have major implications for trading strategies going forward.
Economic Data and Market Sentiment
The market has been awaiting the release of new economic data. All eyes are on the upcoming final reading of US Q3 2025 Gross Domestic Product, as well as jobless claims and the Fed’s favorite inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index. These reports are expected to have a major impact on the EUR/USD currency pair.
This is despite market expectations that the US central bank will hold its current hawkish course. That’s probably going to be the case until Fed Chair Jerome Powell’s term ends in May. This outlook could lead to a period of stability for the Dollar against other currencies if interest rates remain relatively high compared to counterparts.
In 2022, transactions on the EUR/USD combination accounted for 31% of all foreign exchange trades. On top of that, it produced an amazing average daily turnover that eclipsed $2.2 trillion. The Euro is already the second most traded currency in the world after the US Dollar.
Future Projections for EUR/USD
Traders and analysts on the street are watching closely the 1.1600 and 1.1590 EUR/USD levels. These levels will be key fodder as traders focus on technical indicators and daily political news. If the pair falls through these support levels, it would indicate more bearishness for the Euro vs. Dollar.
If EUR/USD successfully regains ground above the January 21 high of 1.1743, it may suggest a potential reversal and renewed bullish momentum. As traders wrestle with this new normal, the market continues to look sideways at the transition of power and whether it helps or hinders economic play.